The President is meeting with Israeli prime minister Benjamin Netanyahu and Palestinian leader Mahmoud Abbas on the Israeli-leg of his first foreign trip as US President. It later annexed east Jerusalem in a move never recognized by the global community. Palestinians also claim Jerusalem as the capital of a future Palestinian state and past peace proposals have proposed splitting the city between East and West Jerusalem, or creating an internationally governed city.
It later annexed East Jerusalem, and in 1980, Israel unilaterally declared "reunited" Jerusalem as its capital.
"I think it'll be informed, again, by the parties that are involved in those talks and most certainly...whether Israel views it as being helpful to a peace initiative or perhaps a distraction", Tillerson said.
Separately, Israelis were riled on Monday by a report on Channel 2 news that a member of the United States delegation making preparations for Mr Trump's visit rejected a request that Mr Netanyahu accompany Mr Trump when he visits the Western Wall, the Jewish religious site that lies in Jerusalem's Israeli-occupied eastern half.
Reported remarks by a Trump administration official rejecting Israel's claim to the Western Wall were "unauthorized" and do not represent the position of President Donald Trump, the White House said.
The US and other countries have their embassies in Tel Aviv.
Trump's rise has now emboldened Israeli extremists to implement their illegal policies and further their occupational agenda by transferring the embassy, a move that Palestinian officials and prominent American politicians have cautioned against.
In recent weeks, press reports in Israel indicated that the Trump administration was not planning to move the embassy.
Trump was right the first time: the USA embassy in Israel should be located in that country's capital, as it is, to my knowledge, in every other country in the world.
The comment was in response to an Israeli request for Prime Minister Netanyahu to join President Trump when he visits the Western Wall.
"From the meeting in the Oval Office: 'The embassy - the PM supports moving it'".
Although the battle against terrorist groups and what Tillerson called "Iran's destabilizing activities in the region" are expected to be the main focus, given the invitation list Trump will likely also hear strong-held views on the Israeli-Palestinian issue, and Jerusalem in particular.
Netanyahu told Friedman his immediate visit to the Western Wall was "a strong gesture of solidarity".
The President will travel to Bethlehem at the conclusion of a two-day long trip that will also take in a visit to the Yad Vashem Holocaust memorial center in Jerusalem and the city's historic quarter.
Mr Abbas quickly reasserted the goal of a Palestinian state as vital to any rejuvenated peace process, reiterating that it must have its capital in Jerusalem with borders based on pre-1967 lines.